Institutional Structure Leading to the Similarity and Disparity in Innovation Inducement in Eu 15 Countries-Finnish Conspicuous Achievement Triggered by Nokia's It Driven Global Business

By Tokumasu, Shinji; Watanabe, Chihiro | Journal of Services Research, April 1, 2008 | Go to article overview

Institutional Structure Leading to the Similarity and Disparity in Innovation Inducement in Eu 15 Countries-Finnish Conspicuous Achievement Triggered by Nokia's It Driven Global Business


Tokumasu, Shinji, Watanabe, Chihiro, Journal of Services Research


(ProQuest: ... denotes formulae omitted.)

INSTRDUCTION

With its enlargement in May 2004, the European Union (EU) embraces 25 countries and 450 million people. Now the EU has a significant power not only in its member countries but also in the world, as it promotes unity and fosters cooperation among the European countries while preserving diversity.

In recent years, the EU has made significant steps towards innovation policies to enhance its competitiveness. The Lisbon European Council of 2000 established the strategic goal for the European Union to become the most competitive and dynamic knowledge-based economy in the world by 2010, with sustainable economic growth, more and better jobs, and greater social cohesion. In achieving this goal, innovation is expected to play a central role, and the EU has launched many policies for promoting innovation.

However, at this moment, notwithstanding the harmonized efforts by the EU, the innovation capabilities among the EU member countries are still widely diverse. Figure 1 demonstrates the ranking of growth competitiveness by World Economic Forum, which would be closely related with innovation capability of a country.

After the 1990s, the EU has experienced substantial changes internally and externally. In 1992, for promoting further integration and creating single market, the Treaty of the European Union was signed in Maastricht and it entered into force in November 1993. In 1995, Austria, Finland and Sweden jointed the EU, and in 2004, ten new countries jointed: Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia. During the same period, externally, emergence of an information society in the beginning of the 1990s brought changes in various aspects of society, economy and our daily lives. Adaptability and exploitability of the EU member countries for those changes would have significant impact on their innovation capability.

It is widely recognized that institutional factors have a significant role in inducing innovation. Also, adaptability and exploitability for those changes would be closely related with institutional factors of a country. The EU is composed of the European countries with many different traditions and languages, but also with shared values and cultures. There are many similarities and disparities in institutions among the EU member countries. Therefore, identifying institutional factors inducing innovation in the EU member countries would be expected to bring useful insights on the roles of institutional factors for innovation.

These observations prompt us the following hypothetical views:

(i) Disparities in institutional system have great impacts on innovation generation and innovation capability, through active interactions among them;

(ii) Institutions that contribute to exploit internal and external changes are crucially important. Particularly, after emergence of an information society, the degree of utilization of ICT and adaptability to an information society would be influential in innovation inducement mechanism; and

(iii) Shifting from supply oriented structure to demand interacting structure leads a way to sustainable co-evolution between innovation and institutional system.

To date, many studies attempted to elucidate the dynamism between institutions and innovation. Watanabe and Kondo (2003) demonstrated that nature of IT could be developed in a self-propagating way through its interaction with institutions. Janes (1995) and Flood (1987) pointed out that while complex institutions reject co-evolution with innovation, they might accelerate self-propagating development once they overcome certain threshold. Flood (1987) also stressed that complexity of institutions can consist of system driven complexity and nations indigenous complexity. UNESCO (1998) postulated that complexity of institutions was indigenous and changes by mind, preference and value of the nations. …

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